Research

Summary: Labor and Quality Growth Within industrials, we prefer the Rails and Services industries – where we see above industrial average estimate achievability with more attractive valuation. Within the more macro sub-segments, we prefer building products to machinery and electrical equipment. HVAC companies appear particularly well-positioned within building products to benefit from secular trends. Airlines…

To read Trivariate’s research note on investing in quality growth click here.

Growth investing has generally worked for the last quarter century, though with some extremely sharp pullbacks.  Higher interest rates since Nov. of 2021 initially drove material multiple contraction, but that has changed over the last 3 months as we near the end of the Fed’s hiking cycle.  As the economy slows, businesses that rapidly grow…

Summary: An industrials expert mentioned to us last week that it finally felt like COVID had worked its way through the system and that it has become a better stock picking environment. We look at three approaches for assessing the stock picking environment–including company-specific risk, valuation dispersion, and pairwise correlations–for each of the industries within…

A big part of investing in equities is understanding and predicting future changes to the perceptions of growth and rates and how that impacts what investors are willing to pay–multiples. How investors sequence these perception changes determines the market direction. This past week there were two major data points, including NVDA’s earnings and Jackson Hole….

In case you missed it, below is a digest of the most clicked on notes and videos that we published this month – a week early in deference to investors taking advantage of the last bit of summer.  If you have any questions on these or other topics related to the current environment for investors,…

To read Trivariate’s recent note on AI click here.

The market has not had a single month of down 2.5% or more this year, but August is on track to end that streak. Only the energy sector is up month-to-date. Investors have been asking whether this is the start of a more material pullback. Media pundits have posited that it is “classic” August /…

When writing their 2023 year ahead outlooks last November, none of the largest four equity firms previewed AI as an important factor for US equity investing.  Hence, when NVDA reported the largest organic increase in forecasted revenue growth of any mega cap. stock ever, with the median estimate increasing from 10% growth to 64% growth…

Summary: For the industrials sector, we see macro activity softening, recent over-earning, and high inventories, married with high earnings expectations, valuation that is not compelling and optimistic rhetoric. This makes the overall risk reward below average for this sector relative to out sectors in our judgment. We think industrials have done better than expected over…